Managing the Complete Product Lifecycle:

Innovation to Execution - a PLM Whitepaper, prepared by

MatrixOne, Inc.

Maintaining positive bottom-line results and building superior products are

main goals of world-class companies today. As such, the driving questions
facing most enterprises are, “how can we do more with our resources?” and,
“how can we innovate better, cheaper and faster while differentiating
ourselves from our competitors in the eyes of our customers?”

Product Lifecycle Management (PLM) is a strategic business approach that

can help organizations achieve these goals while continuing to reduce costs,
enhance and protect intellectual property, improve quality and shorten time
to market. The vision of PLM is to provide an environment to manage the
complete product lifecycle, including processes, data and resources across
the extended enterprise - without the need to overhaul the fabric and
infrastructure of an organization.

We believe that increasing an enterprise’s .flexibility and agility to respond

swiftly and effectively to new changes, new markets, and competitors is the
true hallmark of a world-class PLM strategy. Specifically, we believe that
three critical factors should drive an organization’s PLM strategy:
• Innovation. Enterprises must harness intellectual capital and innovation
within the processes and organizations that touch a product.
• Execution. Cost reductions, quality improvements, condensed time-to
market and strong ROI can only be achieved if transparency, global program
management and collaboration are evident across an enterprise’s value
chain.
• Speed. Reconfigurable infrastructure, process and the independent choice
of tools and technology are essential in providing speed and maintaining
control, as opposed to merely doing things fast. For an enterprise to be
successful in today’s global markets, the choice of the right PLM solution and
strategy is not an option – it is a competitive necessity.

Executive Summary
• Executive Summary 1
• Introduction 5
• What Exactly is PLM? 6
• The Need for PLM at ABC Semi 7
• How ABC Semi Succeeded 7
• The PLM Backbone 8
• A Broad Set of Integrated Applications 9
• Dynamic Business Schema 9
• Common, Low-footprint Integration for Leading Design & Desktop Tools 10
• XML-based Interoperability 10
• Introducing PLM 11
• The PLM Platform 12
• Business Process Applications 14
• Enterprise Integrations 17
• Industry Focused Solutions 18
• Conclusion 18

Product-focused companies recognize the need to continually bring

compelling, reliable new products to market in order to maintain competitive
advantage. Yet doing so in today’s business environment seems nearly
impossible for many companies. Difficult economic conditions, broader
regulatory demands and severely restrained government and corporate IT
budgets combine to make today’s business environment more challenging
and less profitable than at any other time during the past decade.

As a result, companies seeking to continuously introduce successful products

must achieve that success faster and more predictably than ever before—
while driving down costs at every stage. Today, many corporate executives
believe they have already driven the excess costs out of their businesses and
have optimized the profitability of their products through domestic and global
outsourcing of product-related functions, such as design, development and
manufacturing. However, leading companies across a wide range of
industries are continually finding new ways to eliminate costs and improve
efficiency through the implementation of a new strategy, termed Product
Lifecycle Management (PLM).

These companies leverage PLM to speed the development and introduction of

new products, while at the same time reducing the risks and costs associated
with the operation of a global value chain of customers, employees, partners
and suppliers. Today, PLM strategies are helping many of the world’s leading
innovative product companies address their most fundamental challenges,
including:
• Maintain visibility and control of new product investments: To
enable better decision-making and optimize portfolio planning,
executives and other decision makers across the enterprise need to
maintain accurate and consolidated visibility and control on a real-time
basis into all product development initiatives.
• Deliver the right products to the right markets: To produce
winning products that meet customer and market needs, marketing
and product planning teams need to actively collaborate with other
functional groups, customers and suppliers to thoroughly capture
requirements and define new products, features and capabilities.
• Maximize globally dispersed work forces and leverage low cost
opportunities through global product development: To optimize
the cost benefits associated with a design anywhere and build
anywhere strategy and to effectively utilize offshore and outsourced
resources, product development, and operations must be able to
connect design teams, partners, suppliers, outsourced manufacturing
partners and other resources from across the globe in a single
collaborative network.
• Reduce unexpected product and project delays and increase
customer satisfaction through synchronized design and
development: To compress development cycles, reduce critical errors
 and product rework, and enable their teams to quickly respond to
changes as they occur, design organizations need to eliminate the
significant barriers that exist between different design disciplines and
to enable effective real-time collaboration.
• Leverage expertise and improved product design and delivery
by enabling early supplier involvement: To improve the design,
quality and cost benefits of supplier-furnished components for their
end products, procurement organizations need to partner with
strategic suppliers and engage them with product development “early
and often” in all aspects of the development and sourcing process.
• Manage product liability and regulatory compliance: To mitigate
product liability risks and ensure regulatory compliance, manufacturers
need to ensure that they are managing product development and
capturing all aspects of the product record for regulatory approval,
warranty claims and product disposal.

PLM is gaining prominence as the next strategic enterprise application

because of its ability to address any, or all of these challenges with fast ROI
and tangible benefits. Moreover, certain PLM solutions can be deployed in
multiple phases, allowing companies to earn 100% ROI from small, focused
implementations that demonstrate success and can also be built upon to
improve broader functional areas. This new ability to think big, start small
and scale fast has significantly increased the growth rate of successful PLM
implementations in numerous industries, including electronics, high tech,
aerospace and defense, consumer packaged goods and automotive.

The uptake of PLM strategies and implementations is expected to continue. In

fact, industry research .rm CIMdata estimates PLM spending to reach $5.25
billion by 2005.1 Similarly, according to AMR Research, “Drafting a roadmap
of a PLM strategy is essential to long-term success, even survival, for all
product companies.”2
Introduction
PLM represents the first truly holistic view of a company’s products as they
are developed, manufactured and brought to market. It incorporates all
elements of product data, from original CAD designs to manufacturing Bills of
Materials (BOMs), and ties that data to the critical processes and tasks that
numerous internal and aexternal teams undertake to develop and bring
products to market.

PLM’s emergence represents an evolution from Product Data Management

(PDM). While PDM formed the collaboration backbone for product design and
early product development groups, PLM has built upon that by including a
much broader set of functionality, workflows, integrations and business
processes to extend the collaborative backbone to a company’s entire value
chain of customers, employees, suppliers and partners.

Thus, PLM represents an over-arching concept for navigating a product

through its entire life while PDM is now viewed as a sub-process of PLM.
Essentially, PLM is to a company’s product value chain what ERP is to its
inventory and manufacturing processes. However, a well thought-out PLM
strategy enables a company to adopt new improvements to its product
development processes over time in order to avoid the lengthy, costly and
complicated implementations that have been associated with ERP. PLM
represents the single version of the truth that enables a company’s value
chain to most effectively collaborate to bring better products to market faster
and more cost effectively. The following illustration depicts the major
categories of enterprise software applications.

PLM addresses the complete lifecycle of products and fills in the product
related gaps that were never before addressed by other major enterprise
applications. PLM processes clearly interact with those supported by other
enterprise systems, but the creative activity inherent in PLM distinguishes it
from ERP and supply chain management (SCM), which support routine
processes only. For example, sourcing in the PLM environment involves
suppliers in the early stages of product design to speed the development of
prototypes and associated early design processes.

By contrast, the sourcing function within SCM takes place only after a product
is designed and involves little, if any, strategic input from suppliers regarding
a product’s content. To more thoroughly understand PLM’s role in managing
product-related information across the value chain, consider its use at a large
semiconductor manufacturer which we will refer to as “ABC Semi.”

What Exactly is PLM?

With the advent of globalization, ABC Semi sought to take advantage of the
cost and time-to-market benefits through the outsourcing of product design
and manufacturing. However, the company’s existing technology
infrastructure could not support outsourced product design, global product
development, multiple supplier relationships and enterprise-wide
collaboration. The overwhelming number of systems and integrations needed
to share product data and facilitate workflows between the various internal
and external groups quickly made ABC Semi’s global reorganization less
beneficial than anticipated.
Adding to the pain of globalization, the company’s main product – the
integrated circuit, or chip – was becoming more complex and experiencing a
shorter market life. New functionality requirements for chips meant that ABC
Semi’s products had to begin incorporating additional components, and for
the first time, software. Moreover, customers were beginning to demand chip
upgrades within six months of new product introductions.

The company realized that its future viability depended on its ability to speed
products to market faster and to innovate more rapidly than ever before. The
only solution was to tightly integrate and streamline its value chain of
customers, design partners, suppliers and manufacturing resources. But to
do so required best-in-class processes and a single, consistent version of
product-related data to be shared across numerous groups, programs and
functions.

ABC Semi adopted a PLM solution to meet its critical business objectives
because a best-in-class PLM solution would allow ABC Semi to start small,
think big and scale fast. Within eight weeks, ABC Semi had transformed its
ability to capture customer requirements and incorporate them into new and
existing product designs. The payback from that initial implementation would
later allow ABC Semi to achieve enterprise-wide buy-in for its bigger PLM
vision and ultimately deliver more innovative and complex products to
market faster than ever – all at a lower cost.

The Need for PLM at ABC Semi

Prior to adopting a PLM strategy, ABC Semi relied upon linear forms of
communication (email, fax, and phone) between multiple groups when
incorporating new customer requirements into finished products. This often
led to problems in version control because product-manufacturing groups had
little visibility into upstream changes to the product design. Frequently, the
communications loop would break down, and the final version of an approved
product coming out of the design team looked very different than the actual
product that was manufactured and shipped to customers.

Using a PLM solution, groups from product management, design and

manufacturing, both internal and external to ABC Semi, were able to view, in
real-time, a single source of product-related information, including new
requirements, approval status, comments, product markups and the most
recent design changes. This single instance of product information shared by
all helped to dramatically streamline ABC Semi’s product development value
chain and at the same time, reduce excess costs resulting from product scrap
and “swap-outs” at customer sites. With the ROI received from its initial
implementation of PLM, ABC Semi began to adopt PLM applications to
address other areas of its value chain, including supplier integration and
enterprise-wide program management. With its PLM strategy and system in
place, ABC was able to make its move to globalization really pay off. The
most salient benefits from the PLM implementation included the following:
• Faster time-to-market through streamlined global collaboration
• Enhanced product reliability
 • Effective use of outsourced/cheaper design functions
• Better processes in place to respond to future market requirements
• Ability to view “at risk” projects and reallocate resources accordingly

How ABC Semi Succeeded

As PLM continues to prove itself in the marketplace, its recognition is growing
in boardrooms as a strategic, must-have strategy and technology solution. At
the same time, the popularity of PLM among corporate executives has led
numerous software companies to throw their hat into the PLM ring.
Companies considering PLM solutions need to be aware that the PLM market,
like other enterprise application markets before it, has its share of solution
providers that are true subject matter experts as well as vendors trying to
force-.t tangential solutions that require excessive consulting and systems
integration efforts. To ensure the highest levels of productivity and benefit
from PLM, companies should demand a number of key capabilities from a
packaged PLM solution, including:
• A PLM backbone designed for large scale, secure cross-enterprise
deployments
• A broad set of integrated applications for the complete product
lifecycle
• Dynamic business schema with built-in process modeling capabilities
• A common, low-footprint integration for all design and desktop tools
• XML-based interoperability to other enterprise applications
Because each capability is critical, it is worth spending some time to
understand each and its impact on product development, market success and
ultimate profitability.

Serving as the common infrastructure through which all PLM and non-PLM
applications will communicate, the PLM backbone must provide open
standards support for leading operating systems, application servers and
databases. At the same time, it must be able to distribute across an
enterprise and its value chain all product-related files and associated data (in
the form of metadata) and make it all work as if it is one single, logical
instance. This will provide tremendous time and cost savings, as people in
various groups can always work with the latest single version of the truth, no
matter where they are or which application they are using. Buyers must
beware of PLM solutions that require users to login more than one time if
using multiple applications or if accessing data in different geographies. This
means that the underlying PLM backbone is unable to provide one single,
logical view across the value chain and the globe, leading to
miscommunication and product errors. This inability to scale will also require
companies to purchase redundant hardware and software for use at each
individual location, significantly raising the cost of implementation.

Finally, a PLM backbone should support both J2EE and .NET standards. Such
support will allow users to leverage their current infrastructure or choose to
upgrade with any future technology choice, enabling long-term competitive
advantage through optimized capabilities.
The PLM Backbone
It may seem obvious that a valuable PLM environment requires applications
that cover the full PLM value chain, from design collaboration to product
development and sourcing. But the fact is that very few vendors offer out-of-
the-box processes, configurability and functionality across the complete
product lifecycle. Buyers should check this closely.

Of equal importance is that all PLM applications are deeply integrated.

Effective PLM applications must be architected so that they perform well on
their own or as part of a broader solution. For example, consider the early
challenges faced by ABC Semi. The company needed to respond more quickly
to market demands. By using a PLM environment with fully integrated
applications that extend from the Product Management domain to the
Manufacturing domain, ABC Semi was able to significantly speed the process
of capturing market requirements and incorporating them into manufactured
products.

A Broad Set of Integrated Applications

Specifically, ABC Semi’s U.S.-based marketing team and Asia-based
manufacturing groups viewed very different PLM applications. However, the
fully integrated nature of the applications allowed the marketing team to
create a conceptual product and a conceptual product Bill of Materials (BOM)
in the Product Management application. The Engineering application then
translated the conceptual product into a real-life product and a
manufacturing BOM suitable for the Asian manufacturing plant. With an
additional product sourcing application integrated into these first two
applications, strategic suppliers could view the manufacturing BOM and
approve it or recommend changes based on product lead times, quality or
other critical criteria.

The benefits of having a single source of product information are clear, as

valuable time was saved throughout the ABC Semi value chain with the
elimination of multiple manual steps. Costly mistakes were also avoided as all
groups began working off a single version of the truth concerning product
data. Thus, having a broad set of PLM applications becomes truly valuable
once there is seamless integration of those applications. Leading PLM
environments provide this capability out-of-the-box.

Finally, if applications have been architected for seamless integration,

companies with tight budgets can implement PLM in stages, plugging in
additional applications as needed. This allows companies to realize benefits
from smaller, faster implementations and then self-fund broader
implementations over the long term. Focused PLM solutions will have built-in
processes and workflows based on industry best practices. However, every
product company has its own special, long-standing data types or unique
processes that provide it with a competitive advantage. Therefore, PLM
environments must provide dynamic business schemas that enable
companies to define data types, relationships between data types and model
specific product lifecycle processes to .t their unique capabilities and needs.

Dynamic Business Schema

Having the flexibility to configure new PLM processes as time goes by helps
companies
respond to changing market conditions. As we saw with ABC Semi, there was
a sudden new market requirement to incorporate software and additional
components into the company’s core chip products. This required an entirely
new set of processes around sharing hardware and software designs with
third parties who would design the exterior package. Without the ability to
quickly configure its PLM processes, ABC Semi would have faced either an
expensive integration of new applications or run the risk of slowing down its
value chain. Upgradeable “configurability” provided ABC Semi with a
continued competitive advantage.

Product companies often leverage a variety of disparate design and authoring

tools when various groups become involved in product development. This
can grind product development efforts to a halt, because one group of people
has no idea how to access or manipulate the data coming from another group
using different tools. The problem becomes magnified as companies
outsource their designs and push to extend their value chain of partners and
suppliers. Again, leading PLM environments can produce dramatic time and
cost savings in this area.

Common, Low-footprint Integration for Leading

Design and Desktop Tools
Web-based PLM environments that provide access to any thick client obviate
the need for painful integration of desktop tools. With all these tools utilizing
the same integration framework, communications take place via HTTP or
HTTPS at a distributed server level. This means that users only need to
download a small Web applet to the desktop tools they are using in order to
communicate seamlessly with other groups and tools. Moreover, IT
administrators can deploy integration capabilities worldwide via the Web,
with no need to physically install hardware and software in different
geographies.

As a result, “follow-the-sun” design and manufacturing becomes a reality. IT

resource requirements are also minimized because users can leverage a
common infrastructure across multiple geographic locations, making
administration and support simple. Ultimately, this saves companies time and
money and focuses their people on innovation and product quality.

Many companies have adopted the latest ERP and supply chain tools
equipped with XML interfaces for exchanging data with any other XML-
enabled system. This represents a tremendous opportunity for companies
with XML-capable PLM systems, because instantaneous sharing of data
between ERP, SCM and PLM will enable companies to perform electronic
RFQs, electronic bidding and electronic contract awarding with suppliers
directly and securely across the firewall.
XML-based Interoperability
This Enterprise Application Integration, or EAI, would help to streamline the
product development and sourcing processes. Doing this would cost almost
nothing, since the XML-based communications can run over any XML hub
already in place, such as those hubs offered by IBM Websphere, BEA’s
WebLogic or WebMethods.
It may seem obvious that a valuable PLM environment
requires applications that cover the full PLM value chain,
from design collaboration to product development and
sourcing. But the fact is that very few vendors offer out-of-
the-box processes, configurability and functionality across
the complete product lifecycle.